Sweden

A market hanging on tenterhooks -- Sweden waits for credit trading

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Sweden's wind companies are in a state of short term limbo as they await the government's all important Energy Bill, which will determine whether the industry will continue to receive state subsidies over the next few years. Wind industry insiders say the content of the bill, expected to be unveiled this month, will be crucial to prospects for expanding wind power in Sweden. "The bill will regulate subsidies, the cost of green electricity certificates and the industry's financial parameters," says Arne Andersson of the Swedish Energy Agency. "It will be completely fundamental to how the industry will develop."

Wind companies have been in uproar since late last year, when a government report proposed a national green electricity certificate trading system that would entail big cuts in subsidies to new and existing wind plant. The new system would put wind on a par with other renewables such as solar, hydro, biomass and geothermal. However, the wind industry claims the certificates would not compensate for the loss of subsidies and that investment in wind plant would be stunted as a result.

Industry concerns

There is speculation that the government -- which is publicly committed to weaning the country away from nuclear power and fossil fuels and onto renewables -- may attempt to mollify the wind lobby by retaining some investment subsidies, or at least offering a more generous phase-out period. Sweden's wind industry is concerned not only by the cloud that hangs over state subsidies but also by the difficulties encountered in obtaining planning licences and building permits.

About 49 MW of wind capacity was added in Sweden last year, according to preliminary figures. This represents a significant increase on the 21 MW increase recorded in 2000 but includes only one largish project, an offshore 10 MW installation by NEG Micon/Vindkompaniet at Yttre Stengrund in the Kalmar sound.

Companies complain that administrative delays continued to hamper efforts to build new plant. Small-scale wind parks, which need only to seek approval at local authority level, can sometimes gain approval in as little as eight to ten months. But larger projects are subject to much rigorous and time-consuming scrutiny carried out at county level. One such project, a planned 42 MW wind farm at Klasården, first sought approval in 1997 and only received the green light in December 2001.

During the intervening period, wind plant technology developed considerably and the developers, NEG Micon and Vindkompaniet, now say they must build fewer but bigger turbines to maximise the project's profitability. The companies are submitting plans to reduce the number of turbines from 21 to 16 and for these to be rated at 2.75 MW rather than the 2 MW originally envisaged. But this will require a new approval process, thus further delaying the Klasården development.

The trend towards bigger plant was visible across Sweden during 2001. "It is already unusual for us to receive applications for 600 kW machines. The usual size now is seven hundred or one thousand kilowatt or bigger," says Arne Andersson, of the Swedish Energy Agency, which is in charge of allocating investment subsidies. "We think this makes good financial sense."

Offshore potential

Andersson believes there may be a flood of planning applications if the forthcoming Energy Bill proves helpful to the industry. Among the larger projects in the pipeline, apart from Klasården, is a 48 turbine proposal for Lillgrund in the Öresund strait between Sweden and Denmark that would have a capacity of at least 72 MW. Assuming regulatory approval, construction work could start in 2003.

Eurowind has announced plans to build 200 turbines offshore between Sweden and Germany, while Bohus Energi, owned by Danish company World Wide Wind, is planning to build 2700 turbines in the Baltic Sea off Sweden's northern coast in an 8000 MW wind power plant that would dwarf even a giant nuclear station.

It is highly uncertain, however, whether these big-scale projects will ever be fully realised. Although Swedes generally are well disposed to wind power, environmental opposition along Sweden's west and southern coasts to wind farms is becoming ever more vocal. Two municipalities in southern Skåne, Sweden's southernmost province, have already imposed blanket bans on further development of terrestrial wind farms for aesthetic reasons. More local authorities can be expected to follow suit in the months ahead.